The making and shipping of products long distances is contributing to earth death. Now the EU is introducing import/ export laws to force companies to localise their supply chains

Import-export legislation isn’t the most sexy topic and for those focused on their own businesses and lives, the majority of changes to these kinds of legal frameworks are likely to go unnoticed.

However, the EU has been working hard on a new law that takes effect from next month (October 2023) and that will change the shape of supply, with implications for operators and suppliers (see page 44).

Called the Carbon Border Adjustment Mechanism – or CBAM for short – it’s all part of the EU’s ambition to make Europe the first climate neutral continent by 2050.

Parts of this goal are to be realised by ‘disincentivising’ the import of goods and materials from countries with lax environmental standards, or where shipping long distances causes harm to the planet.

The EU’s view is that it isn’t OK for Europe to hit its eco targets while still importing from countries which are pumping out carbon. Neither is it OK to be shipping things around the world that could be made locally, so CBAM is basically a push for reverse globalisation.

To deliver on this goal, carbon taxes will be payable by all companies importing into the EU and the greater distance goods and materials have to travel, the more tax will be due.

Although the UK is no longer technically part of the EU, it’s thought it will align with this new process.

The timeline for the introduction of CBAM will see the final tranche of legislation coming into effect in January 2026 – in only 15 months time – so the rollout of the law will be rapid, forcing companies to adapt.

The new tax landscape will mainly hit the makers and importers of fitness equipment and other kit for health clubs, however, in a facility-based market this in turn will impact operators, meaning we’ll see some disruption in the supply side of the industry where companies have not been aware of or preparing for CBAM.

There will also be work to be done reversing current practices where supply chains were set-up in non-EU countries with less ambitious environmental policies to avoid the EU Emission Trading System.

Because CBAM will favour companies that manufacture within the EU, it’s likely we’ll see some movement in the sales rankings of major suppliers and perhaps a flurry of M&A activity.

We also expect discussions to be held around contracts where operators have committed to longer terms with suppliers who will have to raise prices.

Ultimately, this is the reality of the climate crisis and if we don’t adapt, we won’t have a planet to live on, so the industry needs to move fast and with energy and purpose to accommodate this new reality.